Jacques Neige Started Telemark Inc, a Retail Sporting Goods Store

Jacques Neige started Telemark Inc, a retail sporting goods store specializing in cross-country skiing, snow shoeing, hiking and climbing equipment, ten years ago in Montreal.The store started slowly but grew steadily with the growing popularity of the four activities.Last year Jacques opened a second store in the Laurentians, 100 km away, that is operated by his brother.This year they added a third store run by his son, in another recreational area to the east.The initial store, in a rented suburban retail space, had grown slowly and steadily and as result Jacques has only ever borrowed money from the bank to help finance his seasonal inventory needs.Both of the new stores, built as freestanding stores, have been successful, meeting their sales targets in their first year.But this year, for the first time, Jacques is worried that he will not be able to pay himself and his family members the large dividends they normally receive and rely on for living expenses.Because Telemark is a private company, they have not historically prepared cash flow statements, but this year his accountant suggested that they should prepare one.Below are the cash flow statements for Telemark for this year and last. Telemark Inc
Cash Flow Statements
$\begin{array}{lrr}\text { For the year-ended April } 30\\&2013&2012\\\text { Net income } & \$ 425,000 & \$ 350,000 \\\text { Amortization expense } & 22,000 & 14,000 \\\text { Increase in accounts receivable } & (400) & (200) \\\text { Increase in accounts payable } & 22,500 & 12,500 \\\text { Increase in inventory } & (44,000) & (35,000)\\\text { Cash from operations }&424,100&341,200\\\text { Investing activities: }\\\text { Purchase of land and buildings } & (550,000)&(450,000) \\\text { Purchase of display equipment } & (20,000)&(18,000) \\\text { Cash from investing activities } & (570,000)&(468,000)\\\text { Financing activities }\\\text { Dividends paid } & (110,000) & (80,000) \\\text { Proceeds from shares sold to family members } & 10,000& 10,000\\\text { Cash from financing activities } & (100,000) &(70,000) \\\text { Change in cash for the year } & \$(245,900) & \$(196,000) \\\text { Cash, beginning of the year } & \underline{130,400} &327,200 \\\text { Cash (overdraft), end of the year } & \$(115,500) & \$ 130,400\end{array}$ Required:
Jacques has approached you to explain to him what a cash flow statement is and why the accountant has decided to prepare it this year.He would also like you to help him figure out what, if any, actions should be taken and whether he should stop paying dividends.